NASA-Grumman Negotiations

When Grumman was selected for Apollo, the company expanded from an
aircraft producer into a major aerospace concern. This transition
reflected a long-term resolution, and a considerable investment of
funds, on the part of the firm's senior management to penetrate the
American space market.

The story of Grumman's drive for a role in manned space flight has a
rags-to-riches, Horatio Algerlike quality. The company had competed for
every major NASA contract and, except for the unmanned Orbiting
Astronomical Observatory satellite, had never finished in the money.
Late in 1958, when NASA was looking for a contractor for the Mercury
spacecraft, Grumman had tied with McDonnell in the competition. But only
a short time before, the Navy had awarded several new aircraft
development programs to Grumman. For almost three decades the words
Grumman and carrier-based aircraft had been virtually synonymous. To
avoid disrupting

Navy scheduling and to ensure its contractor's concentration on Mercury,
NASA had selected McDonnell.70
Nevertheless, board chairman and company founder Leroy R. Grumman and
president E. Clinton Towl had continued to support study programs to
strengthen the firm's capabilities and build a cadre of experienced
engineering experts. By 1960 Grumman's study group, guided principally
by Thomas J. Kelly, had begun to focus on lunar flight, examining lunar
spacecraft concepts and guidance and trajectory requirements. The
company had also done some guidance work on circumlunar flight for the
Navy and passed its findings on to NASA.71

When NASA awarded the three six-month Apollo feasibility contracts in
the latter half of 1960, Grumman again bid unsuccessfully. But Kelly and
about 50 engineers continued their investigations full-time, without
monetary assistance from NASA. Through a series of informal briefings
and reports, they kept the agency informed of what they were doing. This
group, on one occasion, said that the lack of funds had limited its
investigations to lunar-orbital flights. In mid-May, when the three
funded feasibility contractors had submitted final reports, Grumman
(like several other firms that had gone ahead independently) also
presented the results of its study to the Manned Spacecraft Center.72

Grumman officials had begun to realize just what a massive undertaking
the Apollo program would be. After much soul searching, the company
decided not to bid alone for the command module contract, joining with
General Electric, Douglas, and Space Technology Laboratories in
submitting a proposal. Grumman's chief contribution was cockpit design
and layout. A strengthened space working group was now headed by Joseph
G. Gavin, Jr., a Grumman vice president. On three floors of a commercial
building near Independence Hall in Philadelphia, the teams, sometimes
numbering 200 persons, from the four companies worked day and night to
put its proposal together.73

When NASA announced that North American had won the Apollo spacecraft
contract, at the end of November 1961, the prevalent feeling at Grumman
was, as one tired engineer recalled, "What do we do now?" One
segment of the combined proposal, however, gave them some ideas and
provided a reason to continue. The four firms had examined many aspects
of a lunar landing mission beyond what was called for by NASA. One
central feature the team explored was the mission mode, only lightly
touched on in the proposal request. At the outset of work on the
contract bid, each of the companies had studied a different mode. By
chance, Grumman had drawn lunar-orbit rendezvous. After the studies had
been compared, this approach was recommended in the joint proposal.74 In the fall and winter of 1961-1962,
Gavin turned full attention to lunar rendezvous and to the separate
vehicle that would be needed.

Under the leadership of Gavin as Program Director and Robert S. Mullaney
as Program Manager, the study group had achieved formal status in the
corporate structure of Grumman and had acquired a number of Grumman's
most experienced engineering and design experts. The team studied
configurations of staged versus unstaged vehicles, subsystem
requirements, propulsion needs, and weight tradeoffs for the lunar
lander. Thus, when NASA issued the requests for proposals for the lunar
module, Grumman was able to include a large amount of solid information
in its bid. Even before lunar-orbit rendezvous had been chosen, Grumman
had begun to build simulators, to define the facilities that would be
needed for the program, and to construct the aerospace building where,
in the beginning, all the design work was done.

Gavin and his people were confident that they were well founded in the
technical requirements of the program; they also recognized that
management capabilities would be an important criteria in the selection.
They therefore enlisted a team of potential subcontractors and stressed
the expertise of these allies. Prominent among the subcontractors were
the firms for the two propulsion systems (Bell and Rocketdyne), which
included the all-important throttleable descent engine.75

Congressman George Miller left examines a one-eighth-scale lunar
module shown by Grumman officials Joseph Gavin and Robert
Mullaney.

Once Grumman had been selected, NASA agreed that a definitive contract
could be written immediately, instead of (as with North American) an
interim, or "letter," contract followed by interminable
negotiations leading to final agreement. For the lunar module, Rector
said, "we negotiated [the whole program], even though we didn't
understand [it] that well at the time."

Grumman officials did not really know what NASA wanted. It was, in
Kelly's words, "an example of ignorance in action, . . . at least
on our part." Neither side fully appreciated the size of the
development they were undertaking. The Grumman group entered
negotiations under the impression that it was simply going to build the
vehicle it had proposed, but "that wasn't what the NASA people had
in mind." NASA expected that, once negotiations were concluded,
Grumman would begin a preliminary design phase, redefining the complete
spacecraft item by item. In the long run, the definition phase took
longer than either party had anticipated. But Grumman had submitted a
preliminary design of the lander, and "we were still somewhat
enthralled with [it]," Gavin recalled. "It took some time for
this to settle down."76

Conferences between NASA and Grumman began on 19 November. About 80
persons from Grumman traveled to Houston for the talks. The Bethpage
contingent was broken into a dozen technical teams and several program
management, reliability, and support groups. Grumman's Negotiation
Management Team comprised Gavin, Kelly, C. William Rathke (Engineering
Manager), and John Snedeker (Business Manager). This management team
obviously had more authority than North American's negotiating group had
on the command and service modules, which was hardly surprising in view
of Gavin's position as vice president of the company and director of
Grumman's space activities.77

The customer and contractor teams sat down to define contractual
details, review subcontracting plans, work out a technical approach, and
spell out management arrangements and procedures for running the
program. They examined requirements for facilities and determined the
number and kinds of test articles (roughly equivalent to North
American's boilerplate spacecraft), to avoid the need for building
complete vehicles for testing specific subsystems. Agreements were
eventually hammered out. The total value of the cost-plus-fixed-fee
contract was set at $385 million, including Grumman's fee of just over
$25 million.78

Apollo officials had intended to finish the negotiations and sign the
contract before adjourning, but the Grumman team caught the last
available airline flight back to New York on Christmas Eve with a few
details still unresolved. Gilruth went to Bethpage early in January to
settle these outstanding items with Gavin and get the contract in final
form for signing. The Houston center had also expected Headquarters
approval during early January; that, too, was delayed. On 14January
1963, NASA told Grumman to begin development of the lunar module,
although the contract was not signed until early March, at a revised
cost figure of $387.9 million.79

70. T. Keith Glennan, "Statement of
the Administrator on the Selection of McDonnell Aircraft Corporation to
Design and Construct a Manned Satellite Capsule for Project
Mercury," n.d., as cited in Swenson, Grimwood, and Alexander,
This New Ocean, pp. 137, 543.